2007-01-14

Let us talk about public transportation - subways, trams, buses, local trains, ferries etc. For most part, public transport is a capital intensive setup. The tracks have to be planned and laid out, the rolling stock acquired, a depot to store the rolling stock at night and to repair and maintain it, a schedule to build and advertise etc. By the time a tram or even a bus line (where no new tracks need to be laid) is in operation, it may have taken 2 or 3 years of planning, acquiring and hiring, not to mention advertising. That is why, today in USA, there are very few new lines and each and every one of them require a heavy investment from the federal government (the only one with enough money). As a result, most people drive and cause massive congestion during rush hours.

So? Well, I have a proposal that would please five groups: drivers, public transport riders, environmentalists, employers and taxpayers. You don't believe it? Let me explain:

Decades back, the US government decided to allow people to deduct mortgage interest from their income for the purpose of computing income taxes. The resulting discount has encouraged home buying to such an extent that home ownership has gone from 20% to 70% since the 1940s. True, the governments are losing a lot of tax revenue but it has had a lot of positive impact as well.

Recently, the US government has extended this deductibility to Health Savings Accounts. The thinking was that if people had some tax-free money tucked away to pay for health care, they would not wait for a catastrophe before seeking medical help. And because HSA money is going to come from wages, it helps the working people and it helps the employers (because they don't have to pay the Social Security and Medicaid taxes on the money going to HSA).

So, I propose that there be a similar Commuter Savings Account (CSA). People be allowed to put up to $5,000 each year pre-tax into their CSA from their wages. The CSA money can only be used for buying tickets from public transportation systems in USA. There would be no restrictions on who can use the tickets. This would give people a big discount on public transportation tickets and hopefully spur greater public transportation adoption. This would lead to more people taking the subway or bus to work (thus reducing the need for parking spots at the office) and reducing the number of cars clogging up the roads. This would also lead to reduction in pollution and the best impact of all - It would lead to less wear and tear on the roads and less repairs. The taxpayers would save more on road infrastructure costs than they would lose in the lost tax revenue.

Oh and I forgot. More people would arrive at the office without road-rage. I am sure you would like that...

About Me

I am a software engineer in Silicon Valley and here are glimpses of my thinking. I have lived in a few countries and various parts of USA and therefore, my writings would tend to reference various locations and people...
Words of encouragement to blog AT terway.com